Global energy giant Shell plc has significantly increased its natural gas deliveries to India following major supply disruptions caused by the escalating conflict in West Asia.

By utilising its extensive international liquefied natural gas portfolio, the company has captured a substantial portion of both spot and term demand.

This strategic move has been particularly vital for the fertiliser sector, where Shell recently secured major procurement tenders.

During a bulk LNG procurement drive by Indian fertiliser firms last month, industry sources report that Shell emerged as the dominant supplier. The company successfully secured the rights to supply 4 trillion British thermal units out of a total 6 TBtus tendered.

This intervention was critical as the Indian government sought to maintain urea production levels despite severe constraints on traditional supplies originating from the Gulf.

As Qatar, traditionally India's largest LNG provider, faced significant export disruptions due to regional hostilities, Shell India responded by importing its highest-ever monthly volumes of LNG in March. 

Beyond the fertiliser industry, the firm expanded its reach to serve various industrial users and retail distributors. Consequently, Shell established itself as the largest supplier of imported gas in India during the month of March.

Shell’s capacity to ramp up operations is underpinned by its 5 million tons-per-year import terminal located at Hazira in Gujarat. This facility, combined with advanced storage infrastructure and Shell’s status as the world’s largest LNG portfolio player, allows the company to source gas from diverse regions outside of West Asia. This flexibility proved essential when primary supply routes were compromised.

To meet Indian demand, Shell leveraged its global assets in countries including Oman, Australia, and Nigeria.

Furthermore, the company operates a massive shipping fleet of over 65 chartered LNG carriers. This logistical advantage enabled the delivery of gas at a time when India’s main supplier was forced to declare force majeure, halting regular shipments.

India currently relies on imports for approximately half of its total natural gas requirements. This gas is an essential feedstock for fertiliser manufacturing and power generation, while also being used for CNG transport, domestic cooking gas, and various industrial applications. Historically, nearly 45 to 50 per cent of these imports have come from Qatar through long-term contracts.

These Qatari supplies were suspended following Iran’s retaliatory strikes against neighbouring countries hosting US troops, which were a response to US and Israeli military actions. The resulting force majeure declared by QatarEnergy affected roughly 11.2 million tons of India’s annual 27 million tons of LNG imports. While state-run entities like GAIL (India) Limited sought alternative cargoes from the United States and Russia, they faced significant logistical hurdles.

A primary constraint for state-run firms was the limited availability of shipping capacity. Transporting gas from distant sources like the United States is time-consuming, with voyages often lasting up to 45 days. In contrast, Shell remained relatively insulated from these pressures due to its integrated global portfolio and private shipping fleet, which allowed for the rapid diversion of cargoes to Indian ports.

The supplies facilitated by Shell, supplemented by limited volumes from GAIL and other state firms, worked alongside a domestic production rate of approximately 92 million standard cubic metres per day. This collective effort helped stabilise gas availability much faster than other fuels like LPG following the initial disruptions in early March.

Initially, the government was forced to curtail gas supplies to certain industrial users to prioritise fertiliser plants and city gas distribution networks.

Some industrial consumers experienced supply cuts of up to 40 per cent. However, as Shell and other entities secured alternative cargoes, these allocations were gradually restored to normal levels.

With the influx of additional imports throughout March, gas supply to operational urea plants was steadily increased. Supply levels rose from 70 per cent of total requirements to nearly 90 per cent by 6 April, reaching approximately 95 per cent by 9 April. This recovery ensured that agricultural needs were met despite the international energy crisis.

Beginning on 6 April, gas availability for other industrial and commercial sectors, as well as City Gas Distribution networks, was also boosted by an additional 10 per cent. Sources indicate that Shell’s elevated import levels are expected to persist throughout April.

The company is anticipated to be a primary bidder in the upcoming 10-12 TBtu gas supply tender planned by fertiliser firms for mid-April.

PTI